Russian oil import shot up after the outbreak of conflict in Ukraine in February 2022.
By Manish Gupta
No one stops India from buying Russian oil at above the $60 per barrel cap, imposed by G7 nations, as Indian firms do not use western services for such transactions, a senior official said on Monday, scotching rumours that the West’s conditions are hampering Delhi’s efforts to step up oil purchases from the sanction-hit country.
However, the Indian companies “sometimes” face delays in paying for Russian oil bought above the $60 a barrel cap, Pankaj Jain, secretary, ministry of petroleum and natural gas, said on the sidelines of the inaugural function of oil and gas conservation campaign – Saksham.
Russian oil import shot up after the outbreak of conflict in Ukraine in February 2022. From less than 1% in India’s import basket, Russia’s share rose to 34% in March 2023. It has replaced Iraq as the top crude oil supplier to India.
Jain said that while most of the Russian crude oil import to India is at below the cap, those who buy above the $60 per barrel level take recourse to alternative methods for settling the payments, some of which get delayed at times.
Sources in Indian oil refineries said that they take help of traders in Dubai for most of their oil purchase from Russia with payment in United Arab Emirates dirhams. However, some banks are hesitant in settling such trades.
The cap of $60 per barrel, fixed by the Group of Seven nations and Australia last December, prevents countries from using western shipping and insurance services unless the Russian oil is sold below the cap.
Besides, the petroleum secretary said, that India is trying to find other countries who are willing to sell oil at discounts. Indian refiners got discounts in the range of 11-16% for their oil imports from Russia last financial year.
Russia might have taken control over one-third of India’s lucrative oil market on heavy discounts beating top suppliers Iraq and Saudi Arabia. Oil analysts doubt if any oil producer in the Middle East will extend any sizeable discount.
With limited oil supplies to Europe from Russia, the Middle East oil producers have a big market to sell their oil and there is no reason for them to give any discount to any country, including India, oil analysts said.
source:financialexpress.com